Legacy Cable TV Operators Continue To Seek Another Bundling Metamorphosis
- by Wayne Friedman , Staff Writer, Yesterday
Decades ago these companies and others made a prescient, and obvious, move in transitioning from being just cable TV operators into a fast-growing broadband business (which now makes up the majority of revenues) as many communications lines led into the homes.
But now that business has slowed -- and in future estimates, will continue to weaken -- in terms of subscriber growth. Wells Fargo estimates cable broadband growth to slow to an average of 2.4% per year (2020 to 2025) from around 4%.
Benjamin Swinburne, media analyst at Morgan Stanley, adds: “With competitive intensity rising and cyclical headwinds building, it remains too early in our view to get more bullish on this defensive group within our coverage.”
He sees “the reality of rising cable broadband competition from fixed wireless, an uncertain path to 5G success at Dish [Network], and cyclical pressures at SiriusXM.”
There is some hope, however: Mobile.
With the big three cable operators renewing agreements with mobile partners, it will allow for more “flexibility around packaging and pricing their wireless products within the bundle. Comcast, Charter, and Altice have all come to market with new unlimited wireless offerings starting at $30/line.”
Initial results, according to Swinburne, indicate that net mobile subscribers have initially ticked up.
Longer-term, these companies -- especially Comcast and Charter -- are looking ahead to perhaps move into other modern distribution of content -- the streaming apps distribution business, which Roku and Amazon Fire TV are in. However, those companies have a major head start -- each with around 50 million to 55 million monthly active users currently.
This is not to say that Comcast/Charter (which have a joint venture for a new streaming distribution platform) and perhaps other cable operators, cannot catch up.
Bundling services has always been at the core of their communications operations. Currently, the big bundle elements are cable/video, broadband, and phone (now mobile).
If they can figure out a way to pull in potential consumers -- especially those who are now looking to trim back on services, including cord-cutters -- they might be able to find yet another communication transition.
Then again, those legacy cable TV operators were a key reason why many consumers became “cord-cutters” in the first place: High cable TV monthly fees on the order $90 to $125 a month depending on your favorite estimate.
'Maybe someone needs to redefine then what “bundling” means.
No comments:
Post a Comment